WHAT IS HUMAN RESOURCE MANAGEMENT AND WHY IS IT IMPORTANT?

What Is Human Resource Management?
An organization consists of people with formally assigned roles who work together to achieve the organization's goals. A manager is the person responsible for accomplishing the organization's goals, who does so by managing the efforts of the organization's people.

Most experts agree that managing involves five functions: planning, organizing, staffing, leading, and controlling. In total, these functions represent the management process. Some of the specific activities involved in each function include:

• Planning. Establishing goals and standards; developing rules and procedures; developing plans and forecasting.
• Organizing. Giving each subordinate a specific task; establishing departments; delegating authority to subordinates; establishing channels of authority and communication; coordinating subordinates' work.
• Staffing. Determining what type of people you should hire; recruiting prospective employees; selecting employees; training and developing employees; setting performance standards; evaluating performance; counseling employees; compensating employees.
• Leading. Getting others to get the job done; maintaining morale; motivating subordinates.
• Controlling. Setting standards such as sales quotas, quality standards, or production levels; checking to see how actual performance compares with these standards; taking corrective action, as needed.

We are going to focus on one of these functions—the staffing, personnel management, or human resource management (HRM) function. Human resource management is the process of acquiring, training, appraising, and compensating employees, and of attending to their labor relations, health and safety, and fairness concerns. The topics in HRM  should therefore provide the concepts and techniques to perform the "people" or personnel aspects of your management job. These include:

• Conducting job analyses (determining the nature of each employee's job)
• Planning labor needs and recruiting job candidates
• Selecting job candidates
• Orienting and training new employees
• Managing wages and salaries (compensating employees)
• Providing incentives and benefits
• Appraising performance
• Communicating (interviewing, counseling, disciplining)
• Training and developing managers
• Building employee commitment

And what a manager should know about:

• Equal opportunity and affirmative action
• Employee health and safety
• Handling grievances and labor relations

The Small Business Challenge

A. Why Small Business is Important – More than half the people working in the United Sates—about 68 million out of 118 million—work for small firms.  Small businesses as a group account for most of the 600,000 or so new businesses created every year, as well as for most  business growth.

B. How Small Business Human Resource Management is Different – Managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur.

1. Size – The general guideline is that it’s not until a company reaches the 100-employee milestone that it can afford a human resource specialist.  However, even five- to six-employee organizations must recruit, select, train, compensate, and retain qualified staff.

2. Priorities – It is not just size but the realities of the entrepreneur’s situation that drive them to focus their time on non-HR issues.

3. Informality – Human resources management activities tend to be more informal in smaller firms.  Entrepreneurs must be able to react quickly to changes in competitive conditions.

4. The Entrepreneur – Entrepreneurs are people who create businesses under risky conditions, and starting new businesses from scratch is always risky.  Entrepreneurs therefore need to be highly dedicated and visionary.

5. Implications – The differences listed above result in potential implications. 1) Small business owners run the risk that their relatively rudimentary human resource practices will put them at a competitive disadvantage. 2) There is a lack of specialized HR expertise as compared with larger firms that have a full range of HR functions. 3) The smaller firm is probably not adequately addressing potential workplace litigation.  Most small business owners are well aware of the threat of employment-related litigation.  4) The small business owner may not be fully complying with compensation regulations and laws.  5) Duplication and paperwork leads to inefficiencies and data entry errors.  For small businesses, employee data often appears on multiple human resource management forms.

C. Why HRM is Important to Small Business – Entrepreneurs need all the advantages they can get, and for them, effective human resource management is a competitive necessity.  Small firms with effective HR practices perform  better than those with less effective practices.